Shares to move sideway as investors brace for Q1 earning reports

An investor follows stock trading. With more quarterly business results released this week, investors may get a clearer idea of how badly the coronavirus has damaged corporate business activities.

The benchmark VN-Index on the Ho Chi Minh Stock Exchange climbed 0.36 per cent to close Friday at 776.66 points.

The VN-Index gained on Friday with bargain hunters returning at the end of a tumultuous week marked by a record collapse in oil prices, a mixed bag of quarterly earnings and growing fears of a severe economic slump.

An average of nearly 291 million shares were traded on the southern exchange during each session last week, worth VND4.6 trillion (US$196.4 million).

On April 20, the benchmark price of US oil futures, which had never dropped below $10 a barrel in almost the last 40 years, plunged to a previously imaginable minus $38 a barrel.

Oil trading witnessed extreme volatility last week due to a collapse in demand as the coronavirus pandemic halts travel and curbs economic activity.

“With more quarterly business results released this week, investors may get a clearer idea this week of how badly the coronavirus has damaged corporate business activities,” said Nguyen Anh Khoa, specialist at Agribank Securities Co (Agriseco).

“The VN-Index is forecast to experience alternative ups and downs between 760-796 points next week,” said Khieu Trong Huy, a stock analyst at Bao Viet Securities Co.

“The market will possibly see a wild divergence among stock sectors. Besides, the index, especially VN30 basket stocks will possibly fluctuate considerably as funds benchmarking VN30-Index will have a Q2 review session next week,” he said.

“The market still faces difficulties from foreign investors’ long-lasting net selling pressure and negative developments of oil price and global stock markets,” he said.

Foreign investors net sold over VND1.6 trillion on both exchanges last week. They net sold more than VND1.45 trillion on the HOSE and nearly VND106 billion on the HNX.

“Profits of listed companies in Q1 and Q2 this year may be below expectations under the influence of the COVID-19 pandemic,” he said.

“In the scenario that the pandemic is under control in the second quarter, trade between Viet Nam and the US and Europe will recover, but at a slow pace,” he said.

“Accordingly, Vietnam is forecast to see the growth bottom in Q2 and will recover gradually in the third and fourth quarters.”

According to Tran Xuan Bach, a stock analyst at Bao Viet Securities Co (BVSC), stock exposure should be maintained at 15-20 per cent of investors' portfolios.

“After taking profits at 790-820 points, investors should stay outside and observe the market. Investors with remaining short-term positions may take advantage of the market’s bull traps to lower stock exposure,” Bach said.

Last week, the Government decision to loosen social distancing helped boost market sentiment.

Strict social distancing measures in place to curb the novel coronavirus were loosened in Hanoi and HCM City from Thursday. Some non-essential services will be allowed to reopen.

With the restrictions lifted, some economic activities will be allowed to resume, which positively affected investor psychology triggering hopeful signs that the net selling streak of foreign investors would level off, said BIDV Securities Company.

Q1 business results of listed companies are also gradually being announced. Therefore, investors can look for a more comprehensive view of the impact of the COVID-19 pandemic, BIDV Securities Co said in its report.